A new policy proposal could help young people struggling to save for a house deposit by allowing them to access early pension funds. Dubbed the 'Citizens Advance,' the plan would give eligible workers up to £12,500 – roughly the value of a full state pension year – to put toward purchasing their first home.
The struggle to save
With high rents and inflation squeezing incomes, many find it impossible to save for a deposit. A 2026 Barclays study found that 34% of Gen Z homeowners relied on the 'Bank of Mum and Dad,' and 43% said inheritance or direct financial help is essential.
How Citizens Advance works
Conceived by the Social Market Foundation and Labour MP Andrew Lewin, the policy lets workers withdraw their first year of pension contributions early, provided they have at least 10 years of National Insurance contributions. This means most recipients would be older Gen Z, millennials, or older.
The lump sum of approximately £12,500 could be combined by couples to reach £25,000, nearly a 10% deposit on an average UK home. The policy is inspired by the 'Great Wealth Transfer' but aims to address inequality, as only a third of adults expect to inherit wealth.
Eligibility and cost
The plan could cost up to £1.3 billion in its first year, depending on eligibility criteria. Options being considered include financial health checks, means-testing, or limiting to specific birth years. The think tank's survey of 2,000 people aged 25-40 found 54% supported the idea, with 50-70% likely to accept the advance depending on conditions.
Real-world precedent
New Zealand already allows first-time buyers to withdraw from their KiwiSaver retirement savings after three years of contributions. Between 2024 and 2025, 43,600 Kiwis used this option for a home deposit. The Citizens Advance could also allow withdrawals for debt repayment, which 18% of respondents said they would choose if permitted.
With the 'Bank of Mum and Dad' distributing nearly £10 billion in deposits in 2024 and 52% of first-time buyers relying on family help, the Citizens Advance offers a potential state-backed alternative to address the housing crisis.
